Thursday, February 28, 2008

Cramer Wrong, ChiSox Daily Right on WDC

Back in mid-January, I wrote that Western Digital (WDC) was a bargain at 25.27 and stated that there was no way that this stock was staying below $30/share. Then the very next day, a caller on Mad Money asks Jim Cramer if it was a good time to buy the stock and I started to get excited. Cramer would give a plug and I would see a nice bounce in the stock. But he said "don't buy!" and called hard drives a commodity and stated that WDC has no control of the market.

I'll leave it to the tech experts to decide if the hard drive industry is a commodity business. But a company earning $4/share, expanding market their share, and trading at $25 is a buy regardless of what type of industry they operate in.

Yesterday, WDC hit a 52 week high of $34.80, a 37.7% gain from when I called it a bargain on 1/15. Today, after two downgrades, it was down to $32.26, 28% higher than the price on 1/15. I can't fault the analysts too much from dropping the stock to neutral from buy (although they certainly are wrong), as this quick of a price increase invites profit taking.

But WDC just revised 4th quarter earnings upward and I still this stock moving higher throughout the year and $40/share isn't out of the question.

As for Cramer, I'm a big fan of the show. But you need to remember that while he may have an opinion on every stock, he only has superficial knowledge of most of them. If you own a stock, there is a good chance you will have a better idea of where it's going than Cramer does.